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Surprise! Europe’s Next Hot Spot Not Where You Think

Tuesday, 14 Aug 2012 | 3:01 PM ET

Prepare for Europe to again take center stage in the fall. And FX Concepts Chairman John Taylor tells us the next hot spot will probably catch many investors entirely off guard.

France is the one that’s going to trick everyone,” says Taylor during a live interview on CNBC’s Fast Money Halftime Report.

With investors so focused on the potential need to bailout Spain and Italy, he thinks they’re all but ignoring the data out of France.

Taylor: Europe's Next Big Problem Will be France
John Taylor, founder of one of the world's largest currency hedge funds, FX Concepts, says France will soon be hit by the debt crisis.

And it’s worrisome.

“This is the third quarter in a row that France has shown absolutely no growth,” he says. That’s a problem.

Because France’s economy is an engine that drives the entire EU, weakness could aggravate a European recession.

Also, Taylor doesn’t like moves the new socialist government is making under President Francois Hollande.

“They’re increasing taxes on companies and taxes on the wealthy,” he says. He believes France can ill afford one, let alone both. Because of these and other initiatives, the rich are inundating tax lawyers, asking if they should flee the nation.

“They’re in a terrible spot,” he says.

Taylor may be ahead of the curve.

On Tuesday, new data showed the entire EU contracted by 0.2 percent on the quarter with France showing no growth. France’s central bank has already said it expects a mild contraction in the third quarter. (Read more:Euro Zone Economy Shrinks Despite German Growth.)

Posted by CNBC's Lee Brodie

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Trader disclosure: On August 14, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Brian Kelly is long TGT; Brian Kelly is long SWK; Brian Kelly is long USG; Brian Kelly is long XHB; Brian Kelly is long IBM; Brian Kelly is short BIG; Brian Kelly is short DLTR; Brian Kelly is short JWN; Brian Kelly is short BBBY; Steve Weiss is short JCP

For Steve Kernkraut
Steve Kernkraut is funds long CHS
Steve Kernkraut is long AEO

For Doug Kass
Nothing to Disclose

For Paul Richards
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